HOW TO MAKE $5,000 — $6,000 IN 5 MINUTES IN CRYPTO WITH DEFI (A FOOL-PROOF METHOD)
I often find myself asking questions about money, especially when it comes to Defi.
Is it possible to earn income passively from Defi despite not knowing anything about tech?
That’s the aim of this article and I’m going to break it down and explain everything that even a 5-year-old will understand and start earning.
What is Defi?
Defi is made up of two abbreviations:
De is short for decentralized and Fi is short for finance.
Putting both together we have decentralized finance.
Decentralized simply means sharing power and control and central authority among several local offices rather than one single office.
For example, instead of power being in the hands of one person, it is now shared amongst several people.
Finance on the other hand simply means the management of large amounts of money, especially by governments, banks, or large companies.
Putting both definitions together;
Defi is taking the management of large amounts of money and several financial transactions from the banks and government and then putting it in the hands of several people like you and me and where we get a say in the decision-making process.
From the definition, it is evident that there is a lot of money and earning opportunity created in the system for individuals like you and me to profit.
The majority of people profiting in this space are those in tech and the goal of this article is to show just how anyone can start earning passive income, then grow from there.
With great power comes great responsibility so this great power that Defi has presented comes with risks.
This article also shows how to manage the risks by following certain guidelines.
Before we continue, imagine earning 5–10% monthly of your money invested for the next 10–20 years.
With that being said, let’s move on.
Averaging $10K-30K a day is now possible thanks to a simple technique in Defi called “liquidity pool arbitration”.
Again I’ll explain.
Liquidity pool arbitration is a combination of three word
Liquidity
Pool
Arbitration
According to Investopedia liquidity simply refers to the ease at which an asset can be converted into ready cash without affecting its market price.
These assets can be crypto assets like Ethereum (ETH), Bitcoin (BTC)
Pool simply means an area of still water.
Now putting liquidity and pool together;
A liquidity pool is an area in Defi where crypto assets are crowdsourced and used to facilitate trades between other assets on the decentralized exchange (DEX) i.e exchanges controlled by no central authority.
For clarity’s sake, crowdsourcing in Defi simply means a model in which crypto assets are obtained from a large, relatively open, and often rapidly evolving group of participants.
Finally, let me explain what arbitration is and then put it all together.
Arbitration in plain English is a procedure in which a dispute is submitted
Due to the crowdsourcing model adopted in the liquidity pool, disputes are bound to arise and this is a problem.
Every problem for someone is an earning opportunity for someone else and in this case, we are the, someone else.
Let me show you how to profit from this problem now you understand the fundamental concept.
Note: There are screenshots of actual earning results but I don’t have the permission to do so.
*Disclaimer: I am not a financial expert but someone passionately educating about the opportunities in Defi.
As with every other thing in life, there are risks involved.
Moving on….
Every network has “liquidity pools” where the owners of the platform have paired two crypto-assets for example Avalanche (AVAX) and DAI
Avalanche is an umbrella platform for launching decentralized finance (Defi) applications, financial assets, trading, and other services.
Dai is the native stable coin for the Maker protocol and the world’s first crypto-collateralized and decentralized stable coin, whose value is soft pegged to the US Dollar.
The liquidity pool would look like “AVAX-DAI LP”.
They work by paying the liquidity pool owner a % of every transaction someone makes going from AVAX to DAI or DAI to AVAX.
Now when a lot of people trade from DAI to AVAX then it then causes the pool to become say 51% DAI and 49% AVAX
This creates an opportunity for you to come in and trade AVAX for DAI to level it out again to equal 50/50.
I’ve seen this done on various platforms during my free time and these patterns were discovered.
Bots that literally track human behavior are being created on these platforms to automate the entire process and arbitrage them automatically.
This is where Data Science meets Blockchain.
Hope you enjoyed the free value lesson?
One more thing to take note of;
Based on simple maths, it doesn’t benefit you to do arbitrage with anything less than $3,000 because .1% = $3 minus gas fees = $0.50 = $2.50 profit if you only have $3K.
The testing of this technique was carried out with $500K.
The money was crowdfunded by 500 persons with an individual investment of $1K thereby generating $500K
Based on this technique, $25K is made daily in profit multiplied by an average of 20 days in a month.
$500K is generated in a month and shared amongst the testers
External investors not among the beta testers are brought in to share the profit with an interest of 8% -12%.
These opportunity windows last for maybe 2–3 minutes and there are multiple exchanges to check in order to take advantage of them
This is why I always ask myself, “What exactly is money?”
Knowledge is indeed power!